We report the development of cell-penetrating quantum dots (QDs) based on the use of multivalent and endosome-disrupting (endosomolytic) surface coatings. Hyperbranched copolymer ligands such as polyethylene glycol (PEG) grafted polyethylenimine (PEI-g-PEG) are found to encapsulate and solubilize luminescent quantum dots through direct ligand-exchange reactions. Because of the positive charges and a "proton sponge effect" associated with multivalent amine groups, this class of ligand-exchanged QDs is able to penetrate cell membranes and is also able to disrupt endosomal organelles in living cells. The grafted PEG segment is essential for reducing the cytotoxicity of PEI as well as for improving the overall nanoparticle stability and biocompatibility. In comparison with previous QDs encapsulated with amphiphilic polymers, the cell-penetrating QDs are smaller in size and are considerably more stable in acidic environments. Cellular uptake and imaging studies reveal that the number of PEG grafts per PEI molecule has a pronounced effect on the intracellular pathways of internalized QDs. In particular, QDs coated with PEI-g-PEG(2) are rapidly internalized by endocytosis, and are initially stored in vesicles, followed by slow endosomal escape and release into the cytoplasm. These insights are important toward the design and development of nanoparticle agents for intracellular imaging and therapeutic applications.